Summary of Hearings on Mining, Mapping, Soils and Other Surface/Subsurface Issues

8/1/13

July 24, 2013: Senate Environment and Public Works Full Committee Oversight Hearing on the Implementation of MAP-21's TIFIA Program Enhancements

July 11, 2013: House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on "America’s Helium Supply: Options for producing more Helium from Federal Lands"

June 13, 2013: House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on "Mining in America: The Administration's Use of Claim Maintenance Fees and Cleanup of Abandoned Mine Lands"

February 14, 2013: House Committee on Natural Resources Oversight Hearing on "The Past, Present and Future of the Federal Helium Program" and Legislative Hearing on H.R. 527

On July 24, 2013 the Senate Environment and Public Works Committee held a full committee oversight hearing on the implementation of Moving Ahead for Progress in the 21st Century Act (MAP-21), which became law in 2012 and which authorizes increased funding for Transportation Infrastructure Financing and Innovation Act (TIFIA) program enhancements. The TIFIA program provides Federal credit assistance to qualified surface transportation projects, and MAP-21 greatly increases funding available for the program, authorizing $750 million for fiscal year (FY) 2013 and $1 billion for FY 2014. Additionally, MAP-21 calls for a number of program changes, which include a rolling application process for TIFIA financing, 10 percent of funding set-aside for rural projects, and an increase in the share of eligible project costs that TIFIA may support. The purpose of the hearing was to discuss the implementation of these dramatic changes.

In her opening statement, Chairwoman Barbara Boxer (D-CA) spoke about the importance of transportation infrastructure and the positive impacts of TIFIA since its inception in 1999. She also underlined the benefits of the program, citing figures indicating that “$1 in government funding would make $30 of infrastructure possible.” She went on to applaud the increased funds made available for the TIFIA program, stating that they have exceeded funding in recent years. Ranking Member David Vitter (R-LA) reiterated Chairwoman Boxer’s statements on the importance of transportation infrastructure, saying that “transportation is fundamental to connect communities and stimulate economic growth.” Senator Vitter also praised TIFIA, calling it an “essential tool” for innovation and construction. Both the Chairwoman and Ranking Member indicated to the first witness, newly confirmed Department of Transportation Secretary Anthony Foxx, that they were looking forward to working with him.

Secretary Foxx echoed the Senators’ sentiments. He explained that “mayors and governors are looking to get more out of taxpayers’ dollars while making investments for the future, and TIFIA is a powerful tool” that makes funding available for many projects. The Secretary also touched on the recent increase in TIFIA applications, citing that $12-15 billion in requests for TIFIA assistance had been made in the last two years, and that $15.5 billion in requests were made this year alone. Secretary Foxx also highlighted the importance of transparency, accountability, and oversight in the application and selection process.

The second panel of witnesses was comprised of members of both the public and private sector. Each witness praised TIFIA and MAP-21, with Jeff Bass calling MAP-21 “the most significant positive change in federal surface transportation policy in the last 20 years” and Arthur Leahy stating that TIFIA “helps our transportation dollars go further.” James Roberts called TIFIA an “important tool” and said that the MAP-21 expansion comes at a very necessary time for national transportation infrastructure, and D.J. Gribbin reiterated the beneficial aspects of TIFIA and MAP-21 expansion. The panel also called for improved transparency in the selection process, and for streamlining the application process.

Questions from the members for both panels focused on the streamlining the selection process for projects and transparency in the selection process. Several members, especially Senator Vitter, expressed concern that the expansion of TIFIA and subsequent buildup of applications in the pipeline represented a trend toward subjective decisions on projects, or “picking winners” rather than natural buildup as the program expands. Secretary Foxx, as well as James Bass and Arthur Leahy, assured the Senator that the buildup was a result of the recent expansion of the program, and that the rolling application process installed by MAP-21 would be the way the projects would be selected in the future. Chairwoman Boxer asked the panel if the MAP-21 expansion had been a change for the better, to which Bass replied that it had indeed, and that the an increase in applications and innovation had been seen as a result. Senator Thomas Carper (D-DE) asked the panel to each give a quick one-minute closing statement, and the responses from each panel member generally referred to TIFIA as very useful and MAP-21 as an overtly positive change, while also calling for streamlining the process and improved transparency in application and selection.

Witness testimony, as well as an archived video of the hearing, are available on the Committee on Environment and Public Works website.

On June 11, 2013, the House Committee on Natural Resources Subcommittee on Energy and Mineral Resources held an oversight hearing on “America’s Helium Supply: Options for Producing more Helium from Federal Lands.” The subcommittee heard testimony regarding the current and future U.S. demand for helium, the future of U.S. helium supplies after the closure of the Federal Helium Reserve, and the helium production potential from federal lands. The Responsible Helium Administration and Stewardship Act, H.R. 527, recently passed through the House with bipartisan support, and hopes to extend the life of the Federal Helium Reserve which is currently set to close at the end of current fiscal year.

The Federal Helium Reserve, instituted in 1960 by the United States Bureau of Mines and currently managed by the Bureau of Land Management (BLM), is a stockpile of helium that provides the U.S. with 50 percent of its helium supply. It has about five to seven years of helium remaining at current extraction rates.

Subcommittee Chairman Doug Lamborn (R-CO) began the hearing by emphasizing the importance of helium in the U.S. He underscored the necessity of developing domestic federal sources of helium, as the current price of helium acts as a deterrent for development on private lands. Furthermore, Lamborn explained, relying on foreign sources for helium, such as Russia or Argentina, makes the United States vulnerable to supply disruptions.

Alan Lowenthal (D-CA) and Full Committee Chairman Doc Hastings (R-WA) discussed the importance of private development to ensure a steady supply of helium to the U.S. in order to avoid foreign dependency. Lowenthal addressed ongoing and pending private helium operations in Wyoming, Utah, Colorado, Texas, Oklahoma, and Kansas, and stated that the Department of the Interior needed to review regulations on helium extraction in order to ensure the environmental impacts of helium mining are properly managed.

Panelists represented government, research, and private sector interests in America’s domestic helium supply. Tim Spisak, Deputy Assistant Director of Minerals and Realty Management at the BLM, agreed that Congress should explore helium production beyond the scope of the Federal Helium Reserve because extending the life of the reserve will only provide a short-term solution.

The private sector witnesses supported the helium legislation because it would help to expedite the permitting process. Scott Gutberlet, VP of Technical & Commercial Services for QEP Resources Inc., explained that since helium is extracted through drilling it is subject to all acts under the National Environmental Policy Act (NEPA) which can delay the permitting process up to a few years, even in areas where natural gas drilling is already occurring. Gutberlet asked the subcommittee to find ways to expedite this process without hindering NEPA. Bo Seers, President of Weil Helium LLC, echoed this view, saying that even in areas that are drilled specifically for helium they still need to go through the same processes as natural gas wells. Seers said that regulations specifically designed for helium extraction are needed in order to expedite this process.

Ramesh R. Bhave, Director of the Inorganic Membrane Technology Laboratory Physical Chemistry of Materials Group at Oak Ridge National Laboratory, spoke about new technologies which open new areas and reduce costs of helium production. Bhave discussed new potential in “low-grade” fields, which can have large quantities of helium at low concentrations, which are not currently economically viable. New technology, Bhave says, may provide a means of accessing this helium and is expected to be available for commercial use by 2020. However, Matt Cartwright (D-PA) pointed out that without funding from the Department of Energy this project will not likely be completed.

Questions focused largely on helium permitting regulations. Bill Flores (R-TX) asked if the current regulations are up to date for modern day helium extraction. Spisak answered that current regulations are set up for large-scale operations and are satisfactory in that regard; however, as small-scale operations begin to develop and new technologies emerge new regulations will need to be worked out. Flores and Lowenthal asked several questions regarding the permitting of helium. Spisak said that the BLM is currently working to develop a permitting framework for both cases where helium is the primary or secondary target. Many of the problems, Spisak said, revolved around either obtaining a natural gas lease or working with the current natural gas lessee.

Opening statements and witness testimony, as well as a video archive of the entire hearing, are available from the committee website.

-CDK

House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on "Mining in America: The Administration's Use of Claim Maintenance Fees and Cleanup of Abandoned Mine Lands"June 13, 2013

On June 13, 2013, the House Natural Resources Subcommittee on Energy and Mineral Resources held an oversight hearing on mining in America. The hearing focused on mining fees and royalties, the withdrawal of certain lands from new mining claims, and Good Samaritan legislation for the cleanup of abandoned mine lands (AMLs).

In their opening remarks, Doug Lamborn (R-CO), Chair of the Subcommittee on Energy and Mineral Resources, and Peter DeFazio (D-OR) expressed interest in reforming the 1872 Mining Law. Lamborn was concerned primarily with the withdrawal of federal lands from new mining claims, the impact of cost recovery regulations for industry, and the slow pace of permitting. He stated that the Behre Dolbear report, which provides information on whether countries’ policies and business conditions are favorable to mining sector growth, has consistently ranked the United States as one of the countries with the most numerous permitting delays. In his opening remarks, DeFazio highlighted the importance of ensuring sufficient funding for the cleanup of AMLs. He noted that 12 western states require mining companies to pay royalties for mining on state lands and suggested that the federal government follow the states’ lead and charge royalties that could then be used to clean up abandoned mine lands.

Witnesses for the hearing were broken into two panels. On the first panel, BLM Acting Deputy Director Jamie Connell gave an overview of the BLM’s work to oversee mining on federal lands and to remediate abandoned mines. She highlighted legislative proposals in the President’s FY 2014 budget that would institute royalties for mining on federal lands and levy a fee on current mining operations to pay for the cleanup of AMLs.

Questions for Connell centered on the BLM’s Abandoned Mine Lands program, the length of the permitting process, and the withdrawal of some federal lands from new mining claims. DeFazio and Dan Benishek (R-MI) emphasized the need for a reliable bonding program to ensure that funds are available for the restoration of current mine sites.

Lamborn requested an explanation of the lengthy 7-10 year timespan required to permit a mine, and Connell responded that mining operations are complex and require public participation and environmental analysis. DeFazio added that permit processing times have decreased in recent years and indicated that the Behre Dolbear report ranks the US as the 6th most attractive country for mining investment overall, despite the country’s low ranking on permitting delays.

Representatives also raised questions about the withdrawal of public lands near the Grand Canyon from new mining claims. Raúl Grijalva (D-AZ) emphasized the importance of the withdrawal in protecting a water supply needed by 25 million Americans. However, Kevin Cramer (R-ND) responded that there is no evidence that water contamination due to mining has occurred in the withdrawal area. He further opined that mining companies in the area whose claims are found invalid should be compensated.

Witness testimony on the second panel focused on mining fees and royalties as well as the need for Good Samaritan legislation for abandoned mine cleanup.

Questions centered on royalties and Good Samaritan legislation, and returned to the topic of withdrawn lands. Grijalva and Tony Cárdenas (D-CA) raised the question of whether it was fair to U.S. taxpayers for hardrock mining companies to mine public land “for free” without paying royalties, and Lauren Pagel, Policy Director of Earthworks, indicated that getting tax breaks without paying royalties is akin to a “double dip.” In response, Harold Roberts, Chief Operating Officer of Energy Fuels Resources Corp., asserted that mining companies pay taxes and create jobs, putting money into the local economy.

The area of greatest consensus was the need for improved Good Samaritan legislation, for which many of the representatives and witnesses voiced their support. Although Steve Moyer, Vice President of Government Affairs for Trout Unlimited, indicated his organization’s preference for the Good Samaritan bill introduced in 2009 by Senator Mark Udall (S. 1777, 111th Congress) over the bill introduced by Lamborn (H.R. 3203, 111th Congress), Moyer, Roberts, and Pagel showed an openness to working with legislators to craft effective legislation.

Opening statements and witness testimony, as well as a video archive of the entire hearing, is available from the committee website.

-BLH

House Committee on Natural Resources Oversight Hearing on "The Past, Present and Future of the Federal Helium Program" and Legislative Hearing on H.R. 527 February 14, 2013

Witnesses:Panel ITim Spisak
Deputy Assistant Director, Minerals and Realty Management, Bureau of Land Management, Department of the InteriorDaniel Garcia-Diaz
Director, National Resources and Environment, U.S. Government Accountability OfficeKimberly Elmore
Assistant Inspector General for Audits, Inspections, and Evaluations, U.S. Department of the Interior

On February 14, 2013, the House Committee on Natural Resources held a hearing to receive testimony evaluating domestic helium demand and the role and future of the Federal Helium Reserve in the domestic market. They examined the potential impacts of closing the Reserve on scientific, technical, medical, and defense industries and discussed the details of the bipartisan bill titled the Responsible Helium Administration and Stewardship Act (H.R. 527). Developed by Committee Chairman Doc Hastings (R-WA) and Ranking Member Edward Markey (D-MA), H.R. 527 will keep the Reserve open until nearly all the helium is sold, raise prices closer to market value, open the sale of helium to more than just a few companies by implementing a semiannual auction, improve transparency, and prevent supply disruptions. The bill will require studies of international and domestic helium resources as well as the development of domestic and global helium demand forecasts, domestic helium use accounts, and assessments and research into the extraction and refining of the isotope helium-3 and the viability of creating a facility to separate the isotope helium-3.

Chairman Hastings began his opening statement declaring, “Helium plays a large role in our daily lives and 21st century economy. Life-saving MRI machines, high-tech manufacturing, and national defense operations are all dependent on helium.” He outlined the Reserve’s history and current challenges noting that following the Helium Preservation Act of 1996 (HPA, P.L. 104-273), the Bureau of Land Management (BLM) was authorized to sell the helium supply until the Reserve’s debt was paid. The BLM sold the helium at “severely less than market prices,” damaging incentive for “future resource development, conservation, and investment in research for alternatives.” The debt is set to be paid in October and the Reserve will close ahead of the predicted closure date, cutting off a third of the global helium supply.

In his opening statement, Ranking Member Markey stated that for many applications, there is “no replacement for helium” and the Reserve provides half of the domestic helium supply. In addition to concerns over Reserve closure in October, he noted that even if the Reserve remains open, “at current withdrawal rates, we have only five to seven years before the helium…is largely gone.” He indicated that H.R. 527 is consistent with the National Research Council’s (NRC) recommendations in their 2010 report “Selling the Nation’s Helium Reserves.” He also mentioned the “artificially low price” of helium and the need to create incentive for developing private helium sources. Regarding helium auctions, Markey stated, “I believe open and competitive markets are the best way to ensure fairness, stability, and a fair return to American taxpayers.”

Tim Spisak, deputy assistant director of Minerals and Realty Management at the BLM, testified that the NRC report concluded “that the HPA mandated sell-off [of federal helium] is negatively impacting the needs of both current and future users of helium in the United States.” He outlined the historical development and management of the Reserve and faulty assumptions and predictions made regarding its operation. The NRC report referred to the helium market as “more volatile than expected” and noted that the requirement to sell “nearly all of the Reserve by 2015 could pose a threat to the availability of this resource for future U.S. scientific, technical, biomedical, and national security users of helium.” The Reserve is responsible for 42 percent of the domestic and 35 percent of the global supply of crude helium. In 1996, the Reserve held 30.5 billion standard cubic feet (scf) of helium and BLM was allowed to sell off all but 600 million scf. Spisak noted that “Federal agencies purchased $10.3 million of helium” for “operations and/or research” in fiscal year (FY) 2012. Spisak voiced BLM’s support for the “goals” of H.R. 527. He expressed approval of the “set of phased authorities for the BLM’s management of the Reserve” as facilitating the “exit of the Federal government from the broader helium market.”

In his testimony, Director of National Resources and Environment for the U.S. Government Accountability Office Daniel Garcia-Diaz reminded the committee that helium is a “nonrenewable natural resource” that the “federal government uses…for, among other things, the space program, national security applications, and scientific research” and “for many of its uses, helium has no substitute.” He laid out three issues facing BLM’s helium program. The first dealt with funding beyond 2013. Since the HPA “requires that all program revenues be returned to the treasury upon repayment of the program’s debt,” without extending revenues or appropriating discretionary funding, the Reserve “may have to undertake an orderly shutdown.” He argued that the question of funding must be addressed, “otherwise the risk of a major disruption in the supply of helium looms in an already stressed market.” Second, he noted the need to determine the price at which to sell the crude helium so that BLM gets a “fair” return and no longer sells it below market value. He acknowledged BLM’s 2011 policy of increasing prices for non-governmental agencies, but noted that “while the new system results in higher prices, it is not a market based system.” Third, he noted the need for clarification of the helium programs “future objectives.” Although HPA required the sale of almost the entire Reserve by 2015, BLM has only been able to sell 79 percent and “will have significantly more in storage than the target” amount. Garcia-Diaz said this raised questions of how this excess will be used.

Kimberly Elmore, Assistant Inspector General for Audits, Inspections, and Evaluations at the U.S. Department of the Interior, stated in her testimony that her “audit team concluded that BLM was not charging market value prices [when selling Reserve helium] and that there were no policies in place dealing specifically with sales to non-governmental customers.” She noted that BLM prices were set based on operating costs and debt repayment, and were adjusted based on “inflation and changes in the programs operating costs” leaving prices well below market value. She cited a 2011 article that revealed price rates from non-governmental helium producers increased to be “nearly three times greater than BLM over the past decade.” Her team indicated a need to “develop a process to identify the fair market value price” and establish “formal procedures” to avoid “fraud, waste and mismanagement” for selling helium to non-governmental buyers, 90 percent of BLM’s buyers. Elmore claimed that by increasing the value of the helium inventory by 25 percent, BLM would gain $250 million in helium revenue. She noted these improvements are “critical” as “high technology uses have led to a rapid rise in helium demand in recent years.”

In the question and answer session for the first panel, Rush Holt (D-NJ) brought up the problem that a “number of federal helium users are seeing deliveries delayed” and are receiving reduced amounts of helium. He cited the fact that Argonne National Laboratory is “receiving only 70 percent of its allocation [and] Oak Ridge [National Laboratory] only 60 percent of its allocation.” He asked about the source of these delays and reductions as well as how to ensure the Reserve meets federal demands first. Spisak stated that the HPA gives “priority” to federal helium needs, “targeted primarily” at users such as the National Aeronautics and Space Administration (NASA), the Department of Defense, and the Department of Energy (DOE). However, he explained that “companies still have a means to adjust what they deliver based on what helium they can acquire, refine, and sell.” He stated that smaller deliveries stem from the natural reduction in pressure and resulting reduced flow rate at the Reserve. He stated that it would be “within Congress’s purview” to make federal users such as NASA and DOE’s national labs a “clear priority.”

Hastings asked about the discrepancies between the low price at which BLM sells crude helium and the high market price at which refined helium is sold. Spisak noted that there are significant costs involved in refining and the two prices cannot be directly compared. When asked if the auction mechanism laid out in H.R. 527 would offer a “way to catch up,” Garcia-Diaz responded that auctions were a good way to “introduce a more market-based” than formula-driven price. Steve Daines (R-MT) requested elaboration on whether the BLM tracks refined prices compared to its crude price. Spisak stated that BLM tracks it in a limited capacity and looks at the U.S. Geological Survey’s Minerals Commodity Summaries. Holt inquired of Elmore, could BLM get “the ability to determine market price”? Elmore responded that BLM can get that ability through the Office of Minerals Evaluation in the Department of the Interior which has “economists and geologists on staff...to help develop market value.”

Raul Ruiz (D-CA) inquired about the fate of “high-tech manufacturing in the U.S. and researchers working on cutting edge applications relating to energy, national security, and telecommunications” if no legislation was passed to keep the Reserve open. Garcia-Diaz stated that he had not examined the implications of not passing a law, but given the share of helium the Reserve contributes to the market (over 40 percent domestically and over 30 percent globally) it “would have a very big impact and would cut across all of those industries.” Elmore agreed stating that losing the Reserve’s supply would result in too great of a demand and not enough helium.

Daines remarked that “one day the reservoir will dry up” and asked if there are “other domestic sources of helium.” Spisek responded that there are several other sources and some are “producing from federal mineral estate.” He outlined the process by which BLM enters “into a contract that authorizes the company to recover that helium and…provide…a kind of royalty to the government for that sale.” Although helium can be recovered if there is three-tenth of a percent in extracted natural gas, Spisek stated without a high enough percent, recovery was not economical.

The witnesses from the second panel represented the end use industries utilizing refined helium. Testimony was heard from Rodney Morgan, vice president of procurement at Micron Technology; Brad Boersen, director of strategic planning and analysis for optical fiber at Corning Incorporated; Gary Page, president of Helium & Balloons Across America; and Dr. Sam Aronson, vice president of APS Physics. These witnesses provided examples of the wide range of products and services reliant upon helium. Morgan stated that “all US users of helium have had to struggle through reduced helium deliveries” and “a delay of even a few days could slow production.” He indicated that H.R. 527 was a “significant step forward” but may offer “uncertainties” regarding long term contracts. Boersen noted support of the H.R. 527’s provisions for a “one year transition period” and increased transparency; however, he also expressed concern over the auction system, stating, “We believe fewer auctions minimize uncertainty of supply.” Page expressed concern over currently not being able to properly supply all of his customers as well as not being able to receive helium from auctions due to a “lack of access to infrastructure.”

Aronson is also the former director of the Brookhaven National Laboratory and his testimony focused on uses of helium in research and the impact of reduced supply on researchers and national labs. He brought up a 1995 statement from the Council of the American Physical Society urging “that measures be adopted that will both conserve and enhance the nation's helium reserves. Failure to do so would not only be wasteful, but would be economically and technologically short-sighted.” He listed some research applications requiring helium and stressed the necessity of helium as a coolant for “accelerators…and research magnets” as well as detectors used in particle physics, astronomy, and military defense systems. He stated, “If researchers cannot obtain helium due to supply or pricing constraints, they must shut down their experiments.” He mentioned the “in-kind program” for obtaining helium and the need to “ensure that small Federal grantees are explicitly eligible for such priority access and pricing.” There is also a need, according to Aronson, for the DOE “to examine the R&D opportunities to increase the efficiency of helium capture at the well-head or during liquefaction.”

During the question and answer section for the second panel, Aronson indicated that Brookhaven National Lab had experience helium shortages. Holt asked if the Reserve should give “priority access for certain kinds of users” such as federal labs. Aronson expressed “hope [that the] priority access that federal users and federal grantees currently have…would continue.” Holt also brought up the fact that “we didn’t foresee” the new technology requiring helium and requested a prediction on the nature of future demands and the market’s ability to “address that demand.” Aronson stated, “I can’t tell you what the landscape of high-tech applications will be 20 years from now but I’m certain that the fundamental research that we’re doing will be necessary to get us there.” Liquid helium, he noted, is a necessary component for continued basic research including research into “technologies that could replace the need for liquid helium in cooling.”

The third panel was comprised of three witnesses from the helium distribution sector and three from the refining sector. The distributors were David Joyner, president of Air Liquide Helium America Inc.; Tom Thoman, division president of gases production at Airgas Inc.; and Kevin Lynch, senior vice president of specialty gases and helium at Matheson Tri-Gas. The refiners were Walter Nelson, director of sourcing and supply chain at Air Products and Chemicals, Inc.; Nick Haines, head of global helium source development at Linde North America; and Scott Kaltrider, vice president of business management and helium at Praxair, Inc. Distributors and refiners reacted to H.R. 527 with a mixture of approval for increased transparency and concern over the semiannual auction of the helium. Lynch noted that the auction “will create conditions of great uncertainty in terms of helium price and availability.” Nelson summed up the objections stating, “a 100 percent auction represents a major change from the status quo, and introduces tremendous risk for our customers. Today, helium customers know that helium will be delivered when they need it. In a 100 percent auction world, all bets are off…If [companies] could not know, from one half year to the next, where their helium would be coming from, they could not develop predictable business plans.”

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the Committee’s web site.